Editorial Comment: Harare council should tread with care

Harare’s roads, many built more than a century ago, now face destruction with little maintenance being done beyond emergency patches on some of the main highways.
It will cost vast sums to rebuild these roads.
The main source of income for roads has been the vehicle licence income, the tax we all pay each year to be allowed to use the roads.
Under this system, those who use roads pay for the roads, a fair method of payment, which is why it lasted so long.

Unfortunately, at one stage the system started breaking down, first because some people, in order to save Z$10 or Z$20 would lie about where their car was kept at night and go through a lot of bother to licence it in some rural area, and second during the great inflation when licence fees quickly became totally worthless.

With the return of monetary stability, Zinara was given the task of collecting all vehicle licence fees at a uniform national rate and distributing the cash to local authorities in proportion to the number of vehicles in each area.

Unfortunately, this good idea has not worked out in practice. Harare is still waiting for the 2013 money in the last week of the year. No one knows what Zinara has done with Harare’s money.

But more than a decade of serious neglect has brought the city to the stage where a large capital injection is needed to rush through proper repairs and catching up of maintenance, plus a proper expansion of the road network and the introduction of mass transport infrastructure.

Waiting for a dribble of cash from Zinara is not going to help. So the city council is now looking very hard at a proposed deal with a South African company, NEO Capital. The council appears to have learned something from its deal setting up Easipark.

This deal is a joint venture, split 51-49 with the council in control and NEO’s profits over 30 years are fixed; it will pump in US$400 million and take out US$450 million.

There are no open-ended financial arrangements. But there are still questions.
The council proposes to repay NEO using US$5 million a year from its share of Zinara licence income and US$10 million a year from licensing billboards.

Are these figures reasonable? Will this sort of money be available? There will be need for extra income to continue maintaining and upgrading what comes through this capital injection. Will extra licence fees, from vehicles and billboards, be adequate or will we start seeing those internal electronic toll-gates or even a rate rise to go on roads?

We need to know more detail and we suspect the council needs more detail.
We are worried about the haste being shown; there are expectations of a deal by next week. While we do not want bureaucratic procrastination, we would like to see the normal procedures that most private companies would put in place before signing a 30-year US$400 million deal.

For a start a second opinion from some expert financial or technical advisors is required. There are such people in Zimbabwe and we cannot understand why a first class accountancy firm, plus possibly a set of consultant engineers, has not been asked to look over the deal and present a formal report.

The Local Government Ministry surely needs some input, and it may well want to get a technical opinion from the Transport Ministry. Has anyone, for a start, done a full background check on NEO Capital?

A delay of a month is all that is required to get these two sets of outside opinions, and we have been told again and again that it is almost impossible to repair roads properly in the rains, so we can probably afford such a delay.

We might even afford a slightly longer delay and have a proper tender drawn up and adjudicated. This is something that those private-sector consultants could do easily.

We agree that some sort of imaginative and wide-ranging solution to Harare’s roads and transport network is required. We like the idea of the city council and its technical staff looking for such a deal.

What we want to know is if the Neo Capital deal is a good deal and if it is the best available deal. We think the council, having accepted that something like this is required, must now go through the correct procedures to ensure that the people of Harare do get the best deal.
Then, when the council signs, everyone is on board.